Malaysian Car-Price Rollback Plan Gets Green Light

Malaysian car prices will be scaled back gradually until 2017 to fulfill a government election campaign promise to reduce vehicle costs 20% to 30% over five years.

International Trade and Industry Minister Mustapa Mohamed says prices of 10 popular models have fallen an average 7.3% since October as a result of greater efficiency and competitiveness in the industry.

The government’s Bernama news agency quotes Mustapa as telling reporters the price rollback should be done in an orderly manner so as to protect growth and existing jobs in the automotive and related industries.

“We have had discussions with automotive manufacturers, and they are aware of ongoing negotiations to conclude a free-trade agreement which would be implemented soon,” he says.

Mustapa says industry players must be ready to step up their competitive edge as Malaysian vehicles become more competitive at home and abroad.

Malaysia Automotive Institute CEO Madani Sahari tells Bernama the government’s price-reduction plan is the best way to benefit consumers and the auto industry without disrupting the ecosystem.

“Five years is the right timing to reduce car prices, because a sudden reduction will impact the secondhand-car industry,” Madani says.

Madani says the price rollback does not involve a cut in the excise duties, which are in line with those of neighboring countries. The key to the government plan is opening up the industry to allow healthy competition that will bring prices down, he says.

Auto maker Perodua endorses the plan. President and CEO Aminar Rashid Salleh says the gradual price cut will give auto makers, vendors, new- and used-car dealers, consumers and other stakeholders, the necessary time to adjust.

“As one of the largest local car makers, Perodua sees great value in a gradual liberalization and this will also help us in being prepared for when the market fully opens,” Aminar Rashid is quoted as saying.